London/New York
—
Stocks in Europe fell Tuesday and US stocks had been set to open decrease as buyers continued to digest President Donald Trump’s conflict with European leaders over possession of Greenland.
Trump on Sunday threatened a new 10% tariff on imports from eight European nations together with Denmark, the United Kingdom and France, amid his calls for that the United States ought to purchase the Danish territory.
Europe’s benchmark Stoxx 600 index — which tracks stocks throughout the area — was down 0.7% Tuesday morning. The Stoxx 600 on Monday fell 1.19% and posted its worst day since November.
Denmark’s OMX Copenhagen 20 — which tracks the 20 most actively traded shares on Copenhagen’s inventory trade — was down 0.1%. The OMX Copenhagen 20 on Monday fell 2.73% and posted its worst day since October.
US stock futures had been additionally decrease. Dow futures had been down 682 factors, or 1.4%. S&P 500 futures fell 1.5%. Futures tied to the Nasdaq 100 slid 1.7%.
In the bond market, US Treasury yields rose as buyers bought bonds. US inventory and bond markets had been closed Monday in observance of Martin Luther King, Jr., Day, so Tuesday will likely be US inventory and bond merchants’ first full day to react to the terribly newsy weekend — and flaring commerce tensions between the United States and Europe.
“The latest developments serve as a reminder that the US economy is not immune to the uncertainty generated by Trump’s policy shifts, while lingering concerns over Fed independence — amplified by the delayed nomination of a new chair and the ongoing probe into Jerome Powell — add another layer of caution around the US currency,” George Vessey, lead FX and macro strategist at Convera, mentioned in a Monday notice.
Investors throughout the globe are attempting to discern how tensions between the United States and Europe would possibly develop.
“This is one of those be-ready-for-anything weeks as wildcards abound for both US and global markets — most of them POTUS-related,” Ed Yardeni, president of Yardeni Research, mentioned in a Monday notice.
While buyers are on edge, inventory market losses to this point have been comparatively contained in comparison with the turmoil spurred by Trump’s preliminary “Liberation Day” tariff announcement in April.
Investors are cautiously expecting a possible off-ramp, together with ready for the US Supreme Court’s ruling on Trump’s use of an emergency powers act to levy tariffs.
The Court is deliberating the legality of the president’s use of the International Emergency Economic Powers Act of 1977 to implement tariffs. That to-be-determined ruling would have direct implications for Trump’s renewed menace of extra tariffs on imports from some European nations.
“Markets will trade risk-off, but bet that either the Supreme Court will take away Trump’s authority to impose tariffs in this manner, or Trump will deliver a TACO reversal anyway,” Krishna Guha, vice chairman at Evercore ISI, mentioned in a Monday notice, referring to the Wall Street acronym for “Trump Always Chickens Out”.
But as tensions flare, uncertainty is rife.
“With the EU readying potential retaliation — including not just tariffs but also possible use of the ‘anti-coercion instrument’ that would be extremely punitive towards US companies doing business in Europe — investors should be prepared for the likelihood that we are still on the way up in the ‘escalate to de-escalate’ cycle, and that the headlines could get worse before they get better,” Sarah Bianchi, chief strategist of worldwide political affairs and public coverage at Evercore ISI, mentioned in a notice.
The anti-coercion instrument is best identified as Europe’s “trade bazooka,” a deterrent meant to stave off threats from unfriendly governments.
Elsewhere, metals soared as buyers sought secure havens.
“Trump’s tariff announcement has escalated trade tensions into an entirely new dimension — one driven less by economic logic and more by political motives,” Carsten Brzeski, world head of macro at ING, a Dutch financial institution, mentioned in a Monday notice.
“It is also pushing the long‑standing transatlantic relationship into a severe crisis, with a clear risk of further escalation and unwarranted negative consequences for both Europe and the US economy,” Brzeski mentioned.